J.C. Penney Co. said Monday its head of merchandising and
marketing is leaving and that CEO Ron Johnson will take over his
duties - all following a pricing strategy that backfired with
Michael Francis, who joined Johnson at the company in October, is leaving immediately, the Plano, Texas-based retailer said in a statement. No reason was given for Francis' departure.
Francis is the first top executive to leave since Johnson, who previously served as head of Apple Inc.'s retail operations, took charge of J.C. Penney last year. Johnson hired Francis away from Target Corp., where he had served as chief marketing officer.
Shares of J.C. Penney fell 5 percent in after-hours trading immediately after the announcement. They had declined 31 percent this year through the close of regular trading Monday.
Johnson developed discount chain Target's "cheap chic" persona before moving to Apple, where he created the world's most profitable stores. Now he's trying to wean J.C. Penney's middle-market customers from a steady diet of coupons and almost constant discounting.
In January, Johnson unveiled his four-year plan to transform J.C. Penney into America's favorite store. In a presentation to investors and suppliers, he described a department store built around a so- called town square, with as many as 100 boutiques carrying items made by well-known brands specifically for J.C. Penney. The first store-within-a-store he announced will sell home goods by Martha Stewart.
Johnson's strategy was simple: quickly replace J.C. Penney's relatively high-list prices, which it aggressively discounted, with lower everyday "fair and square prices."
The changes have yet to bear fruit. The department-store chain, with 1,100 U.S. stores, had a $163 million loss in the first three months of 2012 as revenue slid 20 percent. Sales at stores open more than a year fell an average of 19 percent. The number of people coming into J.C. Penney stores dropped by 10 percent, and the number of those who bought something fell, too, by 5 percent.
"The transition has been tougher than we anticipated," Johnson said during a May 15 presentation to investors.
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